Berkshire Hathaway Inc. s newfound love for Apple Inc. comes as the rest of Wall Street is souring on the technology stocks.Hedge funds and large speculators raised short positions in the Nasdaq 100 Index e-mini futures for a third straight week, pushing net bearish bets to the highest level in five years, according to data from the Commodity Futures Trading Commission.
The divergence highlights the age-old challenge: do you wait for prospects to improve before buying, or jump in when things look bleak?
Sentiment toward technology has worsened as disappointing earnings from International Business Machines Corp. to Microsoft Corp. and Alphabet Inc. fueled skepticism that the industry will quickly restore growth amid sluggish global demand and rising competition.
Earnings in the current period will fall 5.9 percent, worse than any S 500 groups except for commodity producers, analyst estimates compiled by Bloomberg show.While Buffett has historically avoided technology stocks, Berkshire has nibbled on the industry in recent years, adding stakes in IBM and Visa Inc.
The firm held 9.81 million Apple shares, or $1.07 billion worth, as of March 31, according to a regulatory filing from the billionaire s Omaha, Nebraska-based company.Even after a 3.7 percent bounce triggered by Berkshire s disclosure of a stake Monday, Apple shares are still down 30 percent from the all-time high reached in 2015.
At 10.5 times reported profit, Apple is at valued at about half the multiple of the S 500.Other tech stocks are nowhere near as cheap even after trailing the market by the most at this time of year since 2002.